US Ag Production Falling Behind, Leading to Problems With Increased Federal Aid, Panelists Say

U.S. farmers and producers are lagging behind in agricultural production, impacting trade and exports, a U.S. Department of Agriculture official said. Those same farmers and producers are suffering from “catastrophic” conditions from trade-war tariffs, leading to a potentially problematic increase in federal aid to the U.S. agriculture sector, trade experts said.

The U.S. is “significantly behind” on production of soybeans and corn, which will likely decrease exports and overall trade, said Rob Johansson, USDA chief economist.

“We’re significantly behind where we were last year,” Johansson said, speaking with other panelists during a Sept. 9 agriculture policy discussion hosted by the Organization for Economic Co-operation and Development Washington Center. Johansson also said market “competition is remarkably different from just a few years ago,” which also may be impacting U.S. trade.

Constance Cullman, president and CEO of the American Feed Industry Association, called the trade war “catastrophic” for U.S. farmers. “It was an unexpected move to have some of the trade markets essentially shut off,” Cullman said during the panel. “The market [disappeared] overnight and that rug was pulled out from underneath producers.”

Cullman said there needs to be more of an effort to revive multilateral negotiations at the World Trade Organization as opposed to the current trend of bilateral and “small group negotiations.” She said “there are some things that really can only be appropriately addressed in a multilateral situation,” and suggested the bilateral negotiations have led to industry confusion.

“Does anybody know what’s going on with agreements and trade negotiations?” she said. “Right now I find it to be a rather confusing mix of things that are happening.”

The prolonged trade war has led to more federal support to U.S. farmers, which may be contradicting U.S. international obligations and creating unfair market distortions, said Joseph Glauber, a senior research fellow for the International Food Policy Research Institute. In July, for example, the USDA announced $100 million in aid to 48 trade associations to help exporters find new markets (see 1907220007).

“It’s a lot of money. We’re talking $12 billion in 2018, another $16 billion in 2019 and with potential money going out in 2020 -- at least if you follow the tweets of the president,” Glauber said, adding that the aid contradicts the U.S.’s long-standing position as an advocate for freer markets and less market distortions. “I think it’s very problematic.”

While Glauber said some international bodies and trading partners may understand the U.S.’s trade struggles, others may view the aid as unfair bailouts for U.S. farmers, producers and exporters.

“A lot of people are very sympathetic to the agricultural sector because they have borne the brunt of these tariffs. But that goes only up to a point,” Glauber said. “I think these payments are receiving a lot more scrutiny in places like Geneva, and I think the size of the payments have remained very problematic for WTO obligations.”